- The downward trend line on the daily chart acts as resistance, and ES struggles to push through
- Anchored VWAP at the high of the year, acting as an accumulation point for shorts
- Factoring the Inflation report and Fed rate decision into this week’s sentiment
Resistance
You will remember from the analysis on December 2nd that we suspected a fair amount of resistance as ES approached the downward trend line that has been so significant for 2022. This trend line now has 4 connection points, each time selling off once tested. We also mentioned that ES seemed overbought at the time of writing, and there would be a possibility of a retracement back down into the liquidity level at $3,951. Bulls who waited it out instead of chasing the market are sitting in a handsome position as ES bounced right out of that liquidity zone after falling into it, now trading at $4,031.
Trend Line & VWAP Resistance
The Trend line is likely to remain a hurdle for Bulls to overcome, but with the upcoming CPI report and Fed announcement, it could easily break if the fundamentals allow it. That said, the anchored VWAP connected to the yearly high at $4,808.25 also proves a point of resistance.
Factoring In This Week’s Fundamentals
Today is extremely important, with the inflation report being released at 07:30 CT. The Fed rate decision is also being announced tomorrow, so we are in for a very volatile ride this week. Technicals will always be helpful, but in an environment like this, they will not be as reliable since market events will dictate sentiment regardless of any technical edge we can find.
Levels To Watch During CPI Release & Fed Rate Decision
I have marked off some support and resistance levels we can watch during the report in case we want to take advantage of major swings in either direction. There is a feeling around this report, though, that it’s going to be a significant one, and it’s likely going to dictate the market direction for the remainder of this year and into the start of the new year.
